REFUSAL OF
REGISTRATION AND APPEAL AGAINST REFUSAL-OVERVIEW
If a private company
limited by shares refuses, whether in pursuance of any power of the company
under its articles or otherwise, to register the transfer of, or the
transmission by operation of law of the right to, any securities or interest of
a member in the company, it shall within a period of thirty days from the date
on which the instrument of transfer, or the intimation of such transmission, as
the case may be, was delivered to the company, send notice of the refusal to
the transferor and the transferee or to the person giving intimation of such
transmission, as the case may be, giving reasons for such refusal.
Without prejudice to
sub-section (1), the securities or other interest of any member in a public
company shall be freely transferable:
Provided that any
contract or arrangement between two or more persons in respect of transfer of
securities shall be enforceable as a contract.
The transferee may
appeal to the Tribunal against the refusal within a period of thirty days from
the date of receipt of the notice or in case no notice has been sent by the
company, within a period of sixty days from the date on which the instrument of
transfer or the intimation of transmission, as the case may be, was delivered
to the company.
If a public company
without sufficient cause refuses to register the transfer of securities within
a period of thirty days from the date on which the instrument of transfer or
the intimation of transmission, as the case may be, is delivered to the
company, the transferee may, within a period of sixty days of such refusal or
where no intimation has been received from the company, within ninety days of
the delivery of the instrument of transfer or intimation of transmission,
appeal to the Tribunal.
The Tribunal, while
dealing with an appeal made under sub-section (3) or sub-section (4), may,
after hearing the parties, either dismiss the appeal, or by order—
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(a) direct that the transfer or transmission
shall be registered by the company and the company shall comply with such
order within a period of ten days of the receipt of the order; or
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(b) direct rectification of the register and also
direct the company to pay damages, if any, sustained by any party aggrieved.
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If a person contravenes
the order of the Tribunal under this section, he shall be punishable with
imprisonment for a term which shall not be less than one year but which may
extend to three years and with fine which shall not be less than one lakh
rupees but which may extend to five lakh rupees.
DISCLAIMER: THE
ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING
AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT
AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING
INITIATIVE.
THE AUTHOR – CS DEEPAK
SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM
OR 9910248911.
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